For tax years 2014 through 2018, non-exempt individuals are subject to a shared responsibility payment under IRC section 5000A if they fail to maintain minimum essential health
insurance coverage. The shared responsibility payment is the lesser of:
1) The sum of the monthly penalty amounts, or
2) The sum of the monthly national average bronze plan premiums for the shared
responsibility family.

In essence, this formula means that the monthly penalty (the shared responsibility payment) for not having health insurance can never be higher than the monthly national
average cost of purchasing a bronze level health insurance plan through the health insurance exchange.

Note: The Tax Cuts and Jobs Act (TCJA) reduced the penalty to zero for tax years after
2018.

Regulations issued by the U.S. Department of Health and Human Services (HHS) provide
that non-grandfathered health insurance coverage, including qualified health plans offered through Exchanges, may set individual premiums on the basis of only four factors:
- Rating area,
- Age,
- Tobacco use, and
- Family size.

A rating area is a geographic region representing all or a portion of a state that is established by the state or HHS. Rating areas are generally defined to include one or more
counties. Rating areas are not necessarily drawn on the basis of county lines, but, in almost all cases, individual counties fall entirely within a single rating area. Accordingly,
the monthly national average bronze plan premium is based on the bronze-level qualified health plans available to qualified residents of each county (or county equivalent) in
the United States.

To limit the effect of outlier premiums, the median bronze-level premium in each county
is used in computing the monthly national average premium. To account for variations
in population between counties, each county's median premium is weighted based upon
that county's population.